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In this increasingly interconnected world, ideas and capital are flowing around the globe, driving growth and disrupting the status quo. New trade routes emerge, propelling emerging economies to the spotlight and creating opportunities for companies and financial institutions worldwide.

Many of the industrys leading publications recognise our success as an emerging markets-led and financing-focused wholesale bank.

Benefit from a client coverage model that focuses on building deep long-term relationships with clients for advisory, financing and trading needs.

The Global Banking and Markets management team is led by Chief Executive and Group Managing Director Samir Assaf, reporting directly to HSBC Group Chief Executive, John Flint.

We publish regularly updated information on our performance in relation to environmental, social and governance issues. Read more about our approach to ESG in the April 2018 report.

ESG is an investment approach, rather than a standalone product. As such, it can be applied to a variety of products and markets.

ESG means different things to different investors, and is shaped by elements such as geographical location, local public opinion and regulation.

Against this backdrop, HSBC is helping clients transition from rudimentary ESG implementations based on simple stock exclusion, to more bespoke solutions

The HSBC Sustainable Factor Engine is playing an increasingly pivotal role in this process

Equity investors have recognised the need to take account of Environmental, Social and Governance (ESG) considerations for many years. Until recently, however, their implementation of ESG in portfolio construction was generally based on simple exclusionary processes. UK pension schemes, for example, believed that the most effective way of pursuing socially responsible investment strategies was to avoid companies known to be engaged in practices that were harmful to the environment or behaviour regarded as incompatible with corporate ESG guidelines.

A drawback with this approach was its perceived potential for negatively impacting performance. The initial mantra among pension funds was that implementing ESG would run counter to their fiduciary duties, which they saw as being primarily about protecting their members money and generating returns, says Nobby Clark, Managing Director of the Client Solutions Group at HSBC. There is now a growing recognition that it is possible for pension schemes to embrace ESG as a core part of their risk management strategy which is entirely consistent with their fiduciary responsibilities.

Patrick Kondarjian, Head of Structured Institutional Sales at HSBC, says there is no reason why the recognition that ESG can be an integral part of a broader risk management strategy need be confined to equities. People have tended to see ESG as a product, he says. But the reality is that rather than being a product or a standalone proposition, it is an investment approach that can be applied to a variety of products and markets.

HSBC is committed to helping investors build ESG into the full spectrum of their investment strategy. This does not mean being evangelical about ESG. Far from it, because it is essential to recognise that for equity investors there is no such thing as a one-size-fits-all interpretation of ESG. ESG means different things to different people, says Aveesh Acharya, Director of Structured Equity Derivatives at HSBC. For a Japanese investor, it may mean a focus on gender diversity. For a Chinese investor, pollution may be a key consideration. In France, investors may be more interested in global warming. And in the Middle East, their preference may be for Shariah-compliant investment, which shares a number of themes with conventional socially responsible investing.

This divergence of views on the meaning of ESG, twinned with the wide range of style mandates adopted by investors, means that implementing and monitoring an ESG strategy can be more challenging for equity investors than for their fixed income counterparts. As Clark points out, in the fast-expanding green bond market, individual issues generally carry the imprimatur of independent third-party specialists such as Sustainalytics.

For equity investors, the process of measuring ESG compatibility is more subjective and idiosyncratic, which in turn calls for a more bespoke, client-oriented approach to portfolio construction. We dont impose our ethics on our clients, says Clark. We see our role as helping to implement a strategy that is aligned with their particular preferences, based on an analysis of their ESG objectives and of the risks embedded in their portfolio. In other words, we are using a combination of technology, data and thought processes to develop client-oriented solutions rather than generic box-ticking products.

As Acharya explains, this represents the next step in the fine-tuning of ESG implementation into equity portfolio management. He says that as recently as three years ago, demand from clients looking to implement ESG strategies was almost entirely based on using low carbon and green indices to give portfolios an environmentally-responsible tilt. As understanding of ESG considerations evolved, and demand for more bespoke products evolved, we worked increasingly closely with third party providers to create customised indices, he says.

The most recent evolution of this service drills down even further into the portfolio construction process to give clients risk management solutions that are precisely tailored to their investment mandate and style as well as their ESG objectives. For example, we may have clients who have built up a very good track record as equity factor investors based on momentum and value, Acharya says. The question now is: how can they overlay an ESG strategy without introducing unintended exposures and compromising performance.

Optimising Cash Flow & Working Capital in Times of Market Volatility

Companies that emphasise working capital tend to combine a strong focus on operational improvements and leading technologies with the smart use of financial tools and bank solutions

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